Will Australian Manufacturing innovate?

The opening roundtable at the AFR Innovation Summit 2017 wanted to know if we are ready for industry 4.0?
Professor John Pollaers, Chair, the Australian Industry and Skills Committee and Member of the Prime Minister’s Industry 4.0 Taskforce; Dr Audrey Lobo-Pulo, Senior Advisor at the Commonwealth Treasury; Adrian Turner, Chair of the Australian Cyber Security Growth Centre & CEO, CSIRO Data61 and Professor Peter Shergold AC, Chancellor, Western Sydney University looked at what should we prioritise when legislating for industry 4.0, whether regulation adapts to i4.0 technology; and the future of work and what is at stake.

Deloitte’s Damon Cantwell explains where i4.0 is at and how it is working for existing manufacturers and what piece of the toolkit they should look at.

The most effective definition of Industry 4.0 I’ve heard is that: “It’s better than 3, but not as good as 5!”  It’s a good descriptor of how many mid-size manufacturers see the issue.

There are two major elements to the i4.0 story for manufacturing.

The first is the laudable government efforts to focus the industry’s thinking around the uptake of advanced manufacturing techniques such as advanced robotics and materials like nanoparticles, which are best described as a subset of how to get to i4.0.  This is the ground-up approach where there are emerging government programs around deploying sensors in manufacturing operations as an initial step.

The second, which is an issue of real concern, is how this is working for existing manufacturers, some of which are still grappling with transitioning from being an automotive supplier (with the last Australian-built vehicle due to roll of the assembly line before the end of the year) to an advanced manufacturer.

And this is where the ‘disconnect’ occurs.

Every manufacturer we speak with, is interested in advanced manufacturing. Some actually believe they fit the category simply because they are still in existence!

‘Advanced manufacturing’ is best thought of as a toolkit of activities, such as ‘high-end’ automation; the use of new materials (like nanoparticles which have transformational molecular properties that can be used in e.g. manufacturing and energy industries, health, engineering, footwear or clothing); and 3-D printing that will assist manufacturers on the journey to the Industry 4.0 promised land.

The information gap

The information gap comes in trying to assist manufacturing with the practical questions around which aspects of the ‘advanced manufacturing toolkit’ is right for them. Precisely where that 3-D printer that every commentator has indicated they need, actually fits or doesn’t, in their existing production line.

From a glass half full viewpoint, this issue could form the tipping point regarding the decades-old disconnect between Australian manufacturing and our world class R&D infrastructure, that is represented by universities, CRCs, CSIRO etc.  The pragmatics of advanced manufacturing, has long been a problem looking for a solution. And the march towards i4.0 for Australian manufacturers certainly fits the bill.

The size of the prize is also important.

The increased use of advanced manufacturing continually dilutes the importance of labour cost as a basis for manufacturing competitiveness.  More machines, and smarter ones, means cheaper labour is a much lower order priority than it once was.  The issue for both policy makers and the industry itself is how to engage and onshore the global game of manufacturing that is going on.

What products does it make sense to bring back home, because our smart engineers, scientists, designers and IT experts are now the critical components of the labour equation?

There have been some notable examples of doing this well in recent times. Cochlear has brought production back to Australia from Europe, Signet, a Brisbane-based manufacturer has been doing the same. In the US, GE and General Motors have notably invested in on-shored activity. And 3-D printing will see traditional ‘production line’ parts made at a customer’s premises (think mine site, or train, tram or bus factory) as opposed to traditional supply arrangements. This is the opportunity for many of those existing production line operations to progressively embrace this new innovation.

There is still time.

Regulatory frameworks, certification issues and warranty arrangements are still playing catch-up with the technology, but this means that the widespread industrial applications of complex 3-D printed assemblies (like cars) is a way off yet.

However it is critical we maintain our competitiveness attributes while this global reorganisation is going on.

Even the largest manufacturers in the world are taking an incremental approach to the advance towards Industry 4.0, conscious of maintaining existing markets and customers along the way. Australian manufacturing can adopt the same approach, but it does need to be implementing something practical around i4.0 now.

Connecting our more traditional mid-sized manufacturing operations with these advances is the key.

Success will hinge on business engaging with the emerging advanced manufacturing capability in our universities, CRCs and Industry Growth Centres, supported and encouraged by Government. As is always the case with industry policy – creating an accessible ‘one stop shop’ for time-poor manufacturing SMEs to point them in the right direction, is crucial.

The Australian manufacturing sector presents an opportunity for us to finally turn the excellence in our innovation infrastructure into a commercial outcome of global significance and there are some world leading examples.

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